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Bankruptcy

Are the bills backing up? Worried about losing your home or car? Are your wages being garnished? All of these things can cause stress on you and your family. Who can you turn to? Who can you trust?

Here at The Thorpe Law Firm, P.A., we are more than just foreclosure defense attorneys. We have handled hundreds of bankruptcies for our clients. Whether you live in Hillsborough, Pinellas, Pasco or Hernando Counties, we can help you.

Because bankruptcy can be confusing, below is a brief description of the types of personal bankruptcies that can be filed, as well as answers to common questions.

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy is commonlyreferred to as a “Liquidation” or “Straight Bankruptcy”. When completing a Chapter 7 Bankruptcy petition the debtor must list (1) their monthly income, which is an average of what has been earned over the past six months, (2) their monthly expenses, (3) all of their assets including the fair market value of those assets, and (4) all of their debts.

When a petition for Chapter 7 Bankruptcy is filed, a bankruptcy estate is created and a bankruptcy trustee is appointed to oversee the case. Also automatic stay is put in place so all collection activity against the debtor stops. Since the assets of the debtor become part of the bankruptcy estate, the debtor must list what assets are exempt from the claims of creditors and why these assets are exempt. Any remaining assets that are not exempt should be surrendered to the trustee for liquidation. If possible, the debtor may be able to “buy back” non-exempt assets from the trustee.

Usually 30 days after the petition is filed a meeting of the creditors is held where the bankruptcy trustee asks questions of the debtor. Also, creditors may attend this meeting to hear what the debtor has to say, and also to ask questions if necessary. If there are no objections to the discharge, the trustee will forward the file to the Court and an order discharging some debts will be entered. It is important to remember that not all debts can be discharged. Secured debts, such as a debt secured by mortgage on a house, or a security agreement on a car or jewelry, cannot be discharged. Also, there are unsecured non-priority debts like child support or alimony that cannot be discharged. A Chapter 7 Bankruptcy is helpful to a person because it stops collection calls, stops garnishments, and discharges debts that the person cannot pay. It may also help a person in foreclosure because (1) it may free up some funds to help make the mortgage payment, or (2) it may temporarily stop the foreclosure case and give additional time to try to work out a loan modification or some or type of settlement with the lender.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is commonly referred to as a “Reorganization”. Just like Chapter 7, when a petition for Chapter 13 Bankruptcy is filed a bankruptcy estate is created and an automatic stay is put in place so all collection activity against the debtor stops. A bankruptcy trustee is appointed and a meeting of the creditors is held.

However, in a Chapter 13 Bankruptcy the debtor must file a reorganization plan with the Court. A reorganization plan basically sets forth how the debtor proposes to restructure and pay his debts within the next 36 or 60 months. Also, with a Chapter 13 Bankruptcy, some unsecured debts may be partially or completely discharged. If there are no objections to the reorganization plan, the Court will enter an order confirming the plan. A Chapter 13 Bankruptcy is helpful to a person because it gives them a chance to restructure their debt in a fashion they can afford. Also, it may be helpful to a person in foreclosure because (1) it may free up some funds so they can afford to make the mortgage payment, and (2) it may give you 36 to 60 months to pay the mortgage arrearage.